Page 16 - DMGT303_BANKING_AND_INSURANCE

Unit 1: Indian Banking System

Capital and intermediate goods industries (electronics, synthetic fibers, synthetic plastics, Notes
miscellaneous chemicals); and

Infrastructure (power generation, telecom services).
1.5.8 Industrial Investment Bank of India (erstwhile Industrial
Reconstruction Bank of India)

Industrial Investment Bank of India Ltd. (IIBI) set up under the Companies Act, 1956, in March
1997 (by converting the erstwhile Industrial Reconstruction Bank of India), is fully owned by
Government of India. IIBI assists industry—mainly in medium and large sector through wide
ranging products and services. They acquire and/or trade in varied financial instruments from
term loans, equity or debentures and bonds, structured products besides providing various
services like deferred payment guarantee, loan syndication, merchant banking services such as
issue management, underwriting and guarantees, project/reconstruction/one-time-settlement
consultancy/appraisal.

1.5.9 Industrial Credit and Investment Corporation of India Bank
(ICICI) erstwhile Industrial Credit Investment Corporation of
India Limited

ICICI was established by the Government of India in the 1960s as a Financial Institution (FI),
other such institutions were IDBI and SIDBI with the objective to finance large industrial projects.
ICICI was not a bank—it could not take retail deposits; and nor was it required to comply with
Indian banking requirements for liquid reserves. ICICI borrowed funds from many multilateral
agencies (such as the World Bank), often at concessional rates. These funds were deployed in
large corporate loans.
All this changed in 1990s. ICICI founded a separate legal entity—ICICI Bank which undertook
normal banking operations—taking deposits, credit cards, car loans etc. The experiment was so
successful that ICICI merged into ICICI Bank (“reverse merger”) in 2002.
At the time of the reverse merger, there were rumours that ICICI had a large proportions of Non
Performing Loans (“NPA”, as they are known in India) on its books - in particular to the steel
industry. Since 2002, there has been a general revival in Indian industry (and metal-based
industry in particular). It is widely believed that the proportion of NPAs has come down to
prudent levels (even if it were high earlier).
ICICI Bank now has the largest market share among all banks in retail or consumer financing.
ICICI Bank is the largest issuer of credit cards in India. It was the first bank to offer a wide
network of ATM’s and had the largest network of ATM’s till 2005, before SBI caught up with it.
ICICI bank now has the largest market value of all banks in India, and is widely seen as a
sophisticated bank, able to take on many global banks in the Indian market.
The bank is expanding in overseas markets. It has operations in the UK, Hong Kong, Singapore
and Canada. It acquired a small bank in Russia recently. It has tie-ups with major banks in the US
and China. The bank is aggressively targeting the NRI (Non Resident Indian) population for
expanding its business.

Did u know? ICICI Bank now has the largest market share among all banks in retail or
consumer financing.

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